Many, many years ago, I was
assigned a collection portfolio – video rental accounts from a national chain. They charged $3 per day per movie, right in
the contract. So imagine, someone lists
an account with a collection agency, the person has rented five movies, and
they are nine months late … that’s $4050.
Crazy right?
Now video rentals are
a thing of the past, but over the years there have been all sorts of insane
bills that come in – they are legally binding, but astronomical for the service
provided – unregulated electricity bills in the US, cell phone data plan bills,
payday loans at 59.9% interest compounding monthly, non resident hospital bills
at $2500 per day for the bed, contracts with a punitive ‘exit fee’, the list
goes on … these sorts of accounts will always exist.
The important thing is
to present these accounts to the shocked consumers with a modicum of humanity. Be empathetic in delivering the balance, and
be honest about giving the consumer a chance to deal with it.
=> If the consumer wants a settlement, tell them you are more than willing
to take whatever offer they make back to the client, with whatever
justification they might have for a reduction in the debt – and if they are
willing to pay a lump sum settlement, you will do what you can.
=> If the consumer wants to make payment arrangements, make sure you
freeze the interest, otherwise they are just treading water.
=> If the consumer is stunned and refuses
to believe they owe the debt, give them the chance to review the contract or
agreement and get back to you. Let them know they have every right
to understand their rights, and if they want to retain a lawyer or paralegal to
assist them or consult on the legality of the debt, they are welcome to do so.
=> If the debt is beyond the consumers ability to repay in 7+ years,
and especially if they have additional debts, you can discuss the option of
filing for a consumer proposal or bankruptcy. Be honest about the
process, the cost of filing with a trustee, and the long term
effects. While it won’t end up in resolving the balance in full, it
is one avenue to solve the consumer’s financial woes.
=> If the consumer refuses to deal with the debt because it’s
astronomical, be honest about what your next steps are (reporting to the credit
bureau, legal action, etc), but leave the door open to call you
back. Try not to make the debt about conflict between the collection
agent and the consumer.
It’s okay for the collector to say “I totally understand your shock over this” or “I understand this is a lot of money, but reviewing it, it may not be reasonable, but it appears to be legally binding” … that shows empathy without undermining their authority to collect or the creditor’s right to recover their balance.
Don’t get into emotional or potentially derogatory sidebars like “why did you sign a contract like this then?” or “didn’t you read the contract?”. Just stick to the “here and now” and offer options for resolution.
Oh, and that national video chain? I collected on those $4000+ balances because I took the time to explain what would happen if I reported it to the credit bureau, and I sent them copies of the contracts with their signatures. Once the consumers came to realize it was legally owing, and because I was reasonable and empathetic, many consumers worked out arrangements or just paid the account in full.
Got questions about high interest or highly punitive agreements and how to collect on them? Drop me a line.
Thanks kindly,
Blair DeMarco-Wettlaufer
KINGSTON Data & Credit
Cambridge ON
226-946-1730
blair@receivableaccounts.com
